One of Nancy Pelosi’s key meetings on her whirlwind tour of Taiwan reportedly is TSMC, the island’s most valuable company and world’s biggest contract chip maker.
The US house speaker is meeting TSMC chairman Mark Liu on Wednesday to discuss the US congress’s recently passed Chips and Science Act and its US$52-billion in subsidies for new chip manufacturing plants on American soil, according to a Washington Post report.
It’s a notable stop in an itinerary otherwise packed with government agencies and symbolic photo ops and underscores not just the strategic importance of the island, but its outsized technological weight in the global economy.
Taiwan is home to industry-leading chip factories as well as an industrial base that supplies key components for electronics, medical equipment and sensitive nuclear power and military use. US officials have said that Beijing gaining access to the technology and expertise housed in Taiwan constitutes a security risk. China, which considers Taiwan a region under its jurisdiction, has called the speaker’s visit to the island “provocative”.
A TSMC spokesman declined to comment on Pelosi’s trip to the island. The Hsinchu-based chip maker is the exclusive supplier of Apple’s own silicon processors for iPhones and Macs as well as the manufacturing partner of other US companies like AMD, Broadcom and Qualcomm. TSMC is now building a $12-billion fab in Arizona to help boost chip production on US soil, but it still makes the majority of its chips and all of its cutting-edge semiconductors at home.
In response to Pelosi’s visit, Beijing announced four days of live-fire military drills in the waters surrounding Taiwan. The announcement included six exclusion zones encircling Taiwan, blocking ships and aircraft from passing through large swathes of water and airspace and triggering concern that the drills will hamper shipments and exacerbate supply-chain issues.
Disruption
The Taiwan Strait is one of the world’s busiest shipping routes and is the primary path for ships passing from China, Japan, South Korea and Taiwan to westward destinations. Even a minor disruption can mean critical delays for businesses, hospitals and utilities. Asia-based companies like Sony have battled logistics snarls since the start of the pandemic and any further disruption is liable to impact global distribution of key products.
TSMC and peers like Samsung Electronics have had to strike a balance between the US and China, as Washington’s attempts to thwart Beijing’s technological ambitions escalate. Part of the Chips and Science Act passed this week said that companies receiving funding must promise not to boost production of advanced chips in China.
Following Pelosi’s arrival, China halted natural sand exports — used to make glass and concrete — to Taiwan, along with imports of some fish and fruit. Chinese electric-vehicle battery maker Contemporary Amperex Technology has also decided to push back its announcement of a North American factory to supply Tesla and Ford. — (c) 2022 Bloomberg LP
